Tuesday, January 19, 2010

These days one of the statements commonly heard on the streets of India is - "Oh..God..Prices of tomatoes, potatoes etc have increased...Can't help it...but shell more and buy". How many of you ever wondered what and why this is happening?

The AAM AADMI Govt has become KHAAS AADMI. Looks like we have to see vegetables in show cases and not in reality in few years from now if prices keep escalating. Prices will increase ,but not exponentially and certainly not all the time. The quantum jumps all of a sudden as happening today in the market is alarming and uncalled for.

Even when inflation was negative, vegetable prices reached the skies. From and inflation of 20% we have come down to 17%, but that's not checking the prices. Families have to begun to reduce their intake in daily meals.

First of all, let us get some facts straight.

If food prices are increasing, it means that demand is more. India is growing. People now have more money than ever before. This is more true w.r.t cities where income levels are increasing and more products are available to eat. It is also true wr.t rural India as the revolutionary National Rural Employment Guarantee Program is giving sufficient money to a large people for working 100 days.

Subsequently, our agricultural production has not grown and that is the most unfortunate. Our per hectare yield productivity is abysmally low compared to China (already reflected long back in my blog). Agriculture in many parts still lies on old, conventional, traditional method of farming and are unaware what crop must be grown on what soil and at what time.

People in cities esp have begun to eat more pulses, vegetables, milk, meat eggs than the traditional cereals whose production has gone abysmally low. Pulses are not heavily grown in India, but more in the Middle East which we import.

We no longer live in "Green Revolution" era. The fertile Punjab is no longer as fertile as it used to be. The excess water, pesticide usage has rendered land useless thereby more productivity is impossible.

There is a huge shortage of water and electricity in different parts. Gujarat is a standing example of how it has been able to overcome this deficit in numerous ways that media never wants to highlight. Media is more interested in projecting only negative news.

The already fragmented supply chain has become more and more complicated because of 2 factors - (i)Essential Commodities Act (2002) and the (ii) growing number of organized retails like Reliance Agro, Godrej Foods, Sunil Mittal's Field Fresh (with Rothschild), ITC, Cargill, Dabur, HLL Amalgam Foods, Radhakrishna, DCM Shriram, Tata group and many others.

Let's understand how these factors come into play and how prices are going northwards.

PS: The prices are just a number not reflecting accurately on ground and neither is the difference. The price numbers are used just to show that how randomly prices are fixed without any calculations/formulae involved making matters even worse for me as a blogger or for a consumer buying these.

Let's take ONION as the product as it is a very common and a daily item on the dining table.

2) Goes to mandi (vegetable marts where all farmers come to sell) and plans to sell for Rs.6/kg

3) The mandiwala says he will buy for Rs.5.50/kg and not Rs.6/kg.

The farmer desperate to get money (as his land, equipment everything could be under mortgage) agrees to do so.

Now, the mandiwala has 2 scenarios to consider:

4) Scenario 1: The supply is sure.

There is adequate supply of onions. So, decides to sell at Rs.6.50/kg i.e Rupee 1 as profit per kg.

The retailers buy from these mandis and sell at Rs.8/kg.

The retail chain stores buy, package them and sell at Rs.10/kg (making huge profits and sell explaining that packaging and processing costs must be borne)

So, the end customer pays the whole amount either Rs.8 or Rs.10 and farmers don't get any benefit. They go under losses so is the customer

Scenario 2:The supply is unsure because of rotten crop, low production etc.

Now, mandiwala sells at Rs.1o/kg.

The retailers buy from these mandi's and sell at Rs. 12/kg.

The retail chain stores buy, package them and sell at Rs.15/kg.

This difference may even double and there is no control on this price.

Today, dals are being sold at Rs.100/kg or even more while the farmer gets Rs.20/ or more. The remaining 80 is being eaten up by middlemen or mandiwala.

5) Following Scenario 2 as in Step 4, really there are black marketeers, hoarders, speculators, rice millers, agents, traders who buy in huge quantity and don't let the products come into market creating further supply scarcity and prices now go double or triple. So, say a hoarder buys at Rs.10/kg and accumulates huge amount, supply is affected and prices begin at Rs.20/kg and that's when hoarders release and make money.

Now coming to the problem:

The APMC Act - Agriculture Produce Marketing Committee makes it mandatory for farmers to sell at these Marts. But why this obsolete mechanism?

In 2002, the then NDA government led by Vajpayee passed ESSENTIAL COMMODITES ACT by which the essential commodities could be traded like shares in a stock market and farmers would get price on levels with international ones so that it benefits farmers. However, this was true and good when supply was assured. The rule also was this had to be done only after the Government fills its godowns (to be distributed later through Public Distributed System - PDS) to everyone.

In 2004, when NDA govt fell and UPA came to power, the shallow, narrow and money minded corrupt Sharad Pawar took over this agricultural ministry and ruined the farmers, markets and the economy. Instead of amending the act when food production went low, he allowed it to be speculated in the markets increasing the prices even further when already supply was low. (Productivity had hit a new low and bad monsoons continued to wreck havoc in the supply chain)

Under consistent Left Pressure, forward trading of essential commodities was banned. Now, still hoarders continue to play a role because Government is least bothered to fill its godowns before allowing hoarders to acquire them. Every time state governments have been asked to arrest such people, but in a system where law and order is the worst and a nightmare, it will never happen.

Government records say that there was a record production of 991 lakh tonnes of rice in 2009, but the farmer’s share was only Rs 10 per kg out of the market prices of Rs 48 per kg. Who’s pocketing the remaining Rs 38?

Because of shortage of sugar, Mr. Pawar imported sugar at zero duty. They imported at Rs. 30/kg, but the consumer is paying Rs.45/kg...So, how come a difference of Rs.15??

SHARAD PAWAR MUST ANSWER AS TO WHY HE HAS BECOME SO PASSIVE, UNAACOUNTABLE AND WHY HE HAS MONEY AND TIME FOR BCCI MEETINGS AND MATCHES? HE IS NOT FIT TO REIN IN PRICES AND TALKS OF BEING PRIME MINISTER ONE DAY. Mr. PAWAR IS UNFIT AND ABSOLUTELY PATHETIC IN HANDLING MATTERS.

Food is the most essential commodity and if one can't manage or control the supply management chain, at least attempt. If you sit passive, is this what one has elected this govt for?

Solution:

There is nothing innovative. Already, Gujarat has implemented so many things which have improved efficiency in agriculture w.r.t TECHNICALITIES NOT LOAN WAIVERS which don't help farmers. Here's what the Parliamentary Standing Committee under UPA Govt came up with and govt has no time to implement it. This is not a state govt issue, but central govt issue which impacts the states. So, the Central govt must pass the following recommendations made both by - M.S Swaminathan (Father of Green Revolution) and Parliamentary Committee consisting of experts from both parties Congress and BJP.

Monday, January 18, 2010

When one would think of BIMARU states namely - BIhar, MAdhya Pradesh, Rajasthan, Uttar Pradesh - the first thing that comes to one's mind is the social and economic backwardness of these states. For years, corruption and bad governance never changed these states even while other states of India were leaping ahead. However, Bihar and Uttar Pradesh continued to be the worst performers and hence Indian national growth always lagged behind.

Things change with time and Bihar is a classic example. All credit goes to CM Nitish Kumar and his incredible IAS officers' team. They continue to do some amazing wonders in governance and governance delivery mechanisms. For the past 5 years, they have shown how dedication and determination can change a lot in the society.

Law and order:

1)First, drastic reduction of kidnapping from 1393 to 397....down to 20% spread over 4 years..2) 38,824 cases of conviction putting all the major dons like Shahbuddin, Sunil Pandey etc who would come on TV and declare they would murder, kidnap anyone - all are behind bars.3) No longer gunmen holding guns on the streets of Patna - at day or night...a return of law and order - all due to the Home Secretary Amanalluah (IAS Officer).4) Today, international banks, private companies are ready to invest and no longer scared of the law and order issues.

Infrastructure:

1) Pratay Amrit - an excellent IAS officer - got 259 bridges constructed in 3 years.2) 6800 km of roads made - enabling just 4-6 hour from Patna to anywhere in the state.3) The state's 38 districts have good connecting roads - a miracle indeed - all under R.K. Singh (IAS officer)4) 1600 major bridges, culverts constructed.5) W.r.t villages almost 50% is covered and remaining 50% is being covered.

Everything is not perfect..Almost 50% population lies below poverty line. Bihar still is at the bottom in terms of many social parameters including food distribution but I think it is a national problem.

Nitish Kumar also does certain things very differently. Some instances of reports that I came across

1) He is striving for revival of historic Nalanda University by roping in teachers, academicians from across the world to come and prepare syllabus, course content for the future university coming up in Nalanda. He wants to revive the Nalanda magic (no one knows whether it's going to be successful).2) He went to Rajgir ( a famous historic place ) and conducted his cabinet meeting and asked bureaucrats to make it a tourist spot.3) He personally enacted a law reserving 50% panchayat seats for women hoping that women would come forward and take part in governance4) He announced that any volunteers - govt school teachers going into villages will get monetary and other benefits from the govt to increase the literacy rate which is abysmal 47%.5) He conducting Janata Durbar which has become very famous wherein every Monday people feel safe to come and express their day-to-day problems and this style resembles Naidu, Modi and other CM's who effectively did the same.

However, from a non-functional government for 15 years to a visibly functioning government, Bihar has come a long way and it has a long way to go but it is a transition from "no hope" to "complete hope". Let's hope Indian empire's first ever capital Pataliputra (patna) comes back to its golden days again.

I still remember some of my friends from Bihar telling me people flocking in elections not to vote for Laloo's party and vote only for Nitish and see the result - Laloo won just 2 seats of the 42 in 2009 Lok Sabha while had won almost 30 seats in 2004 when Nitish was not into the picture.

So, in short, Bihar's growth was expected due to a humble and hard working Nitish Kumar, but it would be a miracle only if it sustains it.

Wednesday, January 6, 2010

The picture above is a common sight in Indian cities. Buses, trucks, 2 wheelers, 4 wheelers, 3 wheeler autos, rickshaws - all move in lanes at random and no lane discipline is followed. Perhaps, this was the same problem in Brazil and Columbia and that's when Bus Rapid Transport System (BRTS) was implemented and is today a success story in itself.

Bus rapid transit takes part of its name from rapid transit which describes a high-capacity transport system with its own right-of-way, its alignment often being elevated or running in tunnels, and typically running long trains at short headways of a few minutes.

BRTS in India:

When Delhi's CM Sheila Dikshit decided to have BRTS system in Delhi, there was a lot of protest from every corner, yet she went ahead to implement Phase - 1. It was partially successful because it was improperly designed and executed. Phase - II was a disaster. However, the UPA Govt under Manmohan Singh gave green signals to start BRTS in Pune, Ahmedabad, Vishakaptnam, Bangalore and many other cities. Clearly, Ahmedabad is the front runner in terms of achieving an extremely well designed, executed and satisfying BRTS in the country. It was recently awarded the best BRTS system in the country by Dr. Manmohan Singh. It has now been nominated at an International level for effective implementation of public transportation system in any city in the world. Read here for this

Below, are 2 pictures of the effect of the newly introduced BRTS in Ahmedabad. One can see clearly dedicated lanes for public buses without other lanes being disturbed. Other vehicles don't enter this lane and buses don't enter lanes other than ones dedicated to them. Result: Buses can move faster in their lanes and stop or proceed without waiting for any other vehicle.

Gujarat Infrastructure Development Board (GIDB) initiated the plan after Delhi did so and then consulted Center for Environmental Planning and Technology (CEPT) Ahmedabad prepared a feasibility report and due to the efforts of its head Prof. Shivanand Swamy, GIDB and Institute for Transportation and Development Policy (ITDP) - New York together started working and a special purpose vehicle called AHMEDABAD JANMARG LIMITED (AJL) was created under the Central Govt's JNNURM(Jawaharlal Nehru National Urban Renewal Mission) scheme.

Salient features:

Dedicated bus lanes at the center of the road - 2 one for each way. These dedicated lanes move along with the normal traffic (i.e in different lanes) and while taking turns meet each other.

Each bus stop has a separate pavement for people crossing and lanes on either sides for buses to move so that passengers can get down on one side and if needed board another bus on the other side. In this process, they don't CROSS THE ROAD and WILL BE IN THE BUS LANE and move out unless they have to cross road and the road crossings are made suitably (4th and 5th Pic below) so that people can't just cross anywhere they like. This has helped control the traffic movement.More about the Bus stops:

1) Bus stops have ramps specially to make them disabled friendly

2) Bus Stops have detailed route maps and fare details - BOTH IN ENGLISH AND GUJARATI. I think this is the best part - See pictures below -

Even "You are Here" indications on the map can be seen.

3) There are proper LED displays of the bus stop and the buses that will stop at a particular stopand the wait time for the next bus. The bus frequency is anywhere between 4 to 8 minutes.

4) At night times, there is proper illumination and everywhere there is proper signage showing Entry, Exit points. At every bus stop the stop name is illuminated at night.

5) Bus stops are simple and elegant in design.

6) Bus stops have Smart Card System that one needs to enter and board the train.

Now, coming to BUSES:

1) Buses run totally on CNG - Environmentally friendly, less pollution.2) Buses (at least most of them) are Air Conditioned.3) Buses are fitted with GPS.4) Requires a SMART CARD to enter the bus

One can also get it at the counter by paying money to an agent if required

5) The floor of the buses co-incide with the floor level of bus stand/stop and is friendly even to disabled.